The Advantages of Cash Home Buying

Whether you are a seasoned real estate investor, you are looking to buy your first investment property or you are searching for your primary home, you want to make smart decisions when it comes to purchasing real estate. You are looking to save time and money, while making the process as smooth and successful as possible. As an investor, you are looking for profit. As a normal buyer, you are looking for the right house at the best price.

How you buy can really make a huge difference. If you have the ability, cash home buying is almost always going to be your best option. Here are some of the advantages of buying houses with cash, according to the residential real estate investment experts at PropertyLark:

Quicker Sale

First of all, a cash sale will usually be completed much faster than a traditional sale that’s financed through a buyer’s mortgage loan. A cash sale can close in weeks without the need for a full 30-60 escrow process where you have to wait on the loan to be approved by the underwriter.

More Attractive Offers

A cash sale is desirable for many sellers, as well. They may be in a position where they need to sell quickly and a cash transaction makes the most sense. Their sale isn’t contingent on your loan being approved. It removes a lot of stress and complications that some sellers just don’t want to deal with. As a cash home buyer, you may be able to come in with a much lower price point and still have a much more attractive purchase offer than someone with a mortgage loan and all sorts of other contingencies.

Save on Closing Costs

With a mortgage comes origination fees, closing costs and other fees associated with the home sale (appraisals, home inspections, etc.). Though the seller will typically pay the real estate agent and brokerage commissions—along with a number of other closing costs—all these fees cut into your profitability. Cash home buying eliminates many of these unnecessary expenses for both you and the seller.

Simpler Process

Buying with cash really simplifies the home buying process. You don’t have to worry about the mortgage loan and escrow time. At the same time, you may be taking on some additional risk. Most quick cash sales by real estate investors will be with the house in as-is condition. Investors have their own plans to renovate and flip or renovate and then rent out for ongoing income, so this is no big deal. If you are a normal buyer looking for your primary residence, it’s important to know that a cash purchase usually implies you are getting the house in whatever condition it is in. You may be looking for a fixer-upper anyway. This is not to say you can’t work out other details that include repairs or upgrades in your contract with the seller. They may still prefer your cash offer and a less complicated selling process, even if they have to make repairs before it can sell.

No Mortgage or Interest Payments

Obviously, the biggest benefit of buying real estate with cash is that you don’t have to worry about mortgage payments and interest payments on the loan. What you pay is what you get, rather than borrowing money that has interest on top and will cost you a lot more over the long run.

Home Equity Loans Are Easier to Get

Once you own a house and have bought it with cash—meaning you own it outright immediately with no money owed to a lender—you can more easily get home equity loans in the future. If you want to make upgrades or take out a loan on the property to make upgrades, buy another investment property or to pay off other debts, you will be in a good position to take out an equity loan or qualify for a home equity line of credit (HELOC).

Market Fluctuations Don’t Affect You

The real estate market is always fluctuating. Mortgage rates are always changing. Those with adjustable-rate mortgage (ARM) loans may be at the mercy of the market. Others watch their equity go up and down, sometimes leaving them in a bad situation. A cash buyer will own the house fully and these market fluctuations don’t matter as much. You still want and expect the value of the property to rise over time—as it typically does. It’s just less of a roller coaster ride along the way.

How you get your cash will vary from buyer to buyer. Some real estate investors are backed by other investors or investment groups who fund their purchases. Others have built up cash through a series of successful investments and they are able to keep growing their portfolio with new cash home purchases. Some buyers have simply saved their money for a long time experienced a sudden windfall of cash like an inheritance or the sale of another property that allows them to buy another.

We’re not here to know how you get your cash, but we can help you if you have cash or other solid financing behind you and you are looking to buy a property (or multiple investment properties). PropertyLark has grown an elite network of home buyers who have exclusive access to our analytics tools, home search resources and off-market deals on great properties. If you want to join our home buying network, fill out our buyer contact form and brief investor questionnaire to see if you qualify.